Before you are able to purchase a home you need to get pre-qualified and determine the maximum amount you can afford for the mortgage payment. The mortgage company that you visit uses the qualifying ratios 29/41. After speaking with the mortgage broker and answering several questions, the broker compiles this information regarding your income and expenses:You have a monthly income of $5,500.Your significant other that is living with your and will be on the loan earns $4,500 monthly.You have 2 car payments, one is $325 and the other is $280.Your significant other has a motorcycle payment of $450.You have a credit card payment of $25.Your significant other has a credit card payment of $180.The annual property tax in the area that you are considering to purchase the house has an average amount of $2800, while the average home insurance is $800 annually.Determine the anticipated monthly payment of the mortgage based on the given ratios.A) The Front-End (AKA: Housing) Ratio: ?B) The Back-End (AKA: Debt-to-Income) Ratio: ?C) What would be the maximum monthly payment that you can afford? Enter the letter option A or B to indicate your answer.

As there are primary and co-borrower, the co-borrower's income and expenditures are also factored…

Answered: Before you are able to purchase a home…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Before you are able to purchase a home you need to get pre-qualified and determine the maximum amount you can afford for the mortgage payment. The mortgage company that you visit uses the qualifying ratios 29/41. After speaking with the mortgage broker and answering several questions, the broker compiles this information regarding your income and expenses:

You have a monthly income of $5,500.
Your significant other that is living with your and will be on the loan earns $4,500 monthly.
You have 2 car payments, one is $325 and the other is $280.
Your significant other has a motorcycle payment of $450.
You have a credit card payment of $25.
Your significant other has a credit card payment of $180.

The annual property tax in the area that you are considering to purchase the house has an average amount of $2800, while the average home insurance is $800 annually.

Determine the anticipated monthly payment of the mortgage based on the given ratios.

A) The Front-End (AKA: Housing) Ratio: ?

B) The Back-End (AKA: Debt-to-Income) Ratio: ?

C) What would be the maximum monthly payment that you can afford? Enter the letter option A or B to indicate your answer.

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